In Freddie Mac’s Primary Mortgage Market Survey the 30-year fixed-rate mortgage (FRM) averaged 6.18 percent with an average 0.4 point for the week ending December 28, 2006, up from last week when it averaged 6.13 percent. Last year at this time, the 30-year FRM averaged 6.22 percent.
The 15-year FRM averaged 5.93 percent with an average 0.4 point, up from last week when it averaged 5.89 percent. A year ago, the 15-year FRM averaged 5.76 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.98 percent, with an average 0.5 point, up from last week when it averaged 5.96 percent. A year ago, the five-year ARM averaged 5.79 percent.
One-year Treasury-indexed ARMs averaged 5.47 percent with an average 0.6 point, up from last week when it averaged 5.44 percent. At this time last year, the one-year ARM averaged 5.15 percent.
“Mortgage rates edged up over the week following news of a jump in consumer spending in November,” said Frank Nothaft, Freddie Mac vice president and chief economist. Financial markets were concerned that stronger spending could keep inflation elevated. These worries were further compounded by the releases of new and existing home sales for the same month, which both exceeded market forecasts and caused Treasury bond yields to continue to rise. On a positive note, both new and existing home inventories in November fell from recent highs suggesting the excess supply of homes on the market may be normalizing towards historical trends.
“The lower mortgage rates in November and early December are giving the housing market a bit of relief at year’s end, but we expect to see continued volatility in housing market data even if mortgage rates stabilize, due to uncertain weather patterns that can impact the underlying figures one way or the other.”
Great Conditions For Home Buyers
Take a moment to consider these facts:
- There are currently 3.75 million homes for sale. Inventories in recent months have been at record levels, offering consumers the greatest choice in decades.
- However, inventory levels are falling, and the selection of homes will become limited once again.
- Interest rates haven’t been this low for nearly 40 years.
- The average home value increased by 88 percent over the last ten years. In the decade to come, the number of US households is expected to increase by 15 percent, which means housing will stay in high demand.
While conditions for buyers are perfect now, that is likely to change in 2007 as sales pick up, prices gain traction, and conditions improve for sellers. In today’s real estate market, the best time to buy is now.
Will Consumers Pay More For Green?
While the idea of saving money on fuel bills is often attractive, energy-saving systems and appliances are often more expensive than less efficient alternatives. So is it worth paying more to be green?
One way to measure the financial benefits of fuel-efficient appliances and systems is to consider how much money you will save over a period of years. If it costs an extra $200 to buy a really efficient refrigerator but you can reduce fuel bills by $50 a year, then after four years you break even on the excess cost and each year thereafter that you own the appliance you actually pocket a few dollars.
But another benefit of green systems and appliances may emerge when you sell. According to a study by the Florida Energy Extension Service at the University of Florida and a Florida homebuilder, WCI Communities, “87 percent of consumers said they’d pay more for green home features if they recovered their expenses within five years.”
New Year’s Resolutions
Home improvements are on the minds of more people this year than last, according to a popular web site’s predictions about the types of resolutions people are making this New Year’s season.
myGoals.com, a site for setting and reaching personal and professional goals, bases its predictions on the current year’s third quarter goal-setting activity. According to an anonymous, random sample of goals people have set at the site, this year’s New Year’s resolutions can be expected to break down as follows: Health and fitness, 27 percent; personal growth and interests, 15 percent; personal finance, 15 percent; career, 12 percent; education and training, 9 percent; home improvement and real estate, 7 percent; time management and organization, 6 percent; family and relationships, 5 percent, and recreation and leisure, 5 percent.
Last year, only 5 percent of the sample had home improvement and real estate on their minds.
“In 2007, people are going to spend a lot of time working on improving their homes and themselves,” said Greg Helmstetter, CEO of myGoals.com.
Another notable shift is a decrease in goals related to buying real estate such as homes, second homes, and investment properties. This trend is offset by a corresponding increase in goals related to home improvement. “It’s just like the what the economists tell us,” said Helmstetter. “When people stop buying houses, they concentrate on improving the house they’ve already got.”
Last year, 30 percent of all real estate-related goals were to buy a home, whereas 45 percent were to improve a home. This year, only 9 percent of real estate goals will relate to buying a home, whereas a massive 64 percent will involve improving a home.
